Superparamagnetic iron oxide nanoparticles (SPIONs) are actively used as highly sensitive imaging probes to provide contrast in MRI. In this study, we propose the use of SPIONs encapsulated with antibody-conjugated poly(lactic-co-glycolic acid) (PLGA) as a potent theragnostic agent. The SPIONs were synthesized by a chemical co-precipitation method of ferric and ferrous ions, and subsequently encapsulated with PLGA by using an emulsification-diffusion method. Herceptin was chemically conjugated to the SPION-encapsulating PLGA nanoparticles to target the human epidermal growth factor receptor 2 (Her2/neu) overexpressing breast cancers. FACS and MR molecular imaging revealed that the Her2/neu overexpressing cell line showed a stronger contrast enhancement than the Her2/neu non-expressing cell lines, and the signal intensity of in vivo MR imaging decreased as the concentration of Herceptin increased. This strategy of encapsulating SPIONs with PLGA will be highly useful in functionalizing magnetic nanoparticles and improving the diagnostic and therapeutic efficacy of a wide array of cancer treatments.